National Australia Bank v McFarlane
[2005] VSC 438
•9 November 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 8713 of 2002
| NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937), FRANCIS JOHN CICUTTO AND MICHAEL DOUGLAS MAIN | Plaintiffs |
| V | |
| MALCOLM JAMES McFARLANE AND JILL ELIZABETH McFARLANE | Defendants |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 25, 26, 29 AND 30 NOVEMBER 2004 | |
DATE OF JUDGMENT: | 9 NOVEMBER 2005 | |
CASE MAY BE CITED AS: | NATIONAL AUSTRALIA BANK LIMITED v McFARLANE | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 438 | |
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Tort – Malicious prosecution – Collateral abuse of process – Whether elements of each tort established – Injunctive relief.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G.H. Garde QC and Mr A.T. Schlicht | Russell Kennedy |
| For the Defendants | In person |
HIS HONOUR:
Introduction
The three plaintiffs in this proceeding were the first plaintiff, the National Australia Bank Limited ("the NAB"), the second plaintiff, Francis John Cicutto, who was at all material times the Chief Executive Officer of the NAB, and the third plaintiff Michael Douglas Main, a legal practitioner and the senior partner in the firm of Russell Kennedy, solicitors for the NAB. The two defendants, Malcolm James McFarlane and his wife Jill Elizabeth McFarlane, were former customers of the NAB. The plaintiffs' causes of action were malicious prosecution and abuse of process. At the hearing the only relief sought by the plaintiffs was, in simple terms, an order that each of the defendants be restrained from laying or preferring any charges for summary or indictable offences in the Magistrates' Court of Victoria or any other court against the first plaintiff, its solicitors or estate agents or any employee or agent of the first plaintiff, its solicitors and estate agents or against the second plaintiff or the third plaintiff.
The Factual Background
The factual background to this unusual application started as long ago as 1994 when the NAB commenced a proceeding against Mr and Mrs McFarlane and a proceeding against Mr McFarlane alone seeking possession of three rural properties in northern Victoria ("the possession proceedings"). According to the judgment of Byrne J in the possession proceedings[1], given on 11 April 2002, Mr and Mrs McFarlane had granted a mortgage to the NAB over one of the properties, being part of the property known as Mystic Park, Kunat, in January 1978 and they had granted a mortgage to the NAB over another of the properties at Angle Road, Kunat in September 1988. The third property, which was the remaining part of the Mystic Park property, was registered in the name of Mr McFarlane alone. He had granted a mortgage to the NAB over that property in September 1988. In 1996 Russell Kennedy became the solicitors on the record for the NAB in the possession proceedings.
[1]National Australia Bank Limited v McFarlane [2002] VSC 116
Before setting out what happened at the hearing of the possession proceedings, it is necessary to mention that on 28 February 2002, Mr and Mrs McFarlane commenced a proceeding in this Court at Ballarat ("the Ballarat proceeding") against Mr Main, Russell Kennedy, the NAB and three other defendants, one of whom had obtained a judgment against Mr McFarlane in January 1995 which subsequently led to a sequestration order being made against Mr McFarlane in December 1998. Part of the statement claim in the Ballarat proceeding alleged the following:
"34.The Defendants, by dishonestly conspiring have attempted to deprive the Plaintiffs of their lands and have attempted to pervert the course of justice.
PARTICULARS
The Defendants, have breached of the Crimes Act 1958 (Vic.) and the Crimes Act 1914 (Cth.)
35.The Defendants, in breach of the Crimes Act by their agreement to bankrupt the Firstnamed Plaintiff, and their attempt to dishonestly deprive the Plaintiffs of their land, which is theirs or to which they are or would be or might be entitled, have caused the Plaintiffs loss and damage.
PARTICULARS
The loss and damage is not only in the cost of defending the bankruptcy action of the Fifth Defendant but in the unliquidated damage for personal loss of self esteem and confidence and ability to borrow and place goods on account and obtain a benefit from Centalink and get a job."
By an order made on 26 March 2002 Master Kings dismissed the proceeding as against Mr Main, Russell Kennedy and the NAB. An appeal by the McFarlanes against that order was dismissed by Beach J on 19 April 2002.
The trial of the possession proceedings took place before Byrne J between 8 and 11 April 2002. The McFarlanes were unrepresented. As part of their defence, two subpoenas were issued on 9 April 2002 including one directed to Mr Cicutto requiring him to attend to give evidence. On the following day counsel for the NAB applied to have the two subpoenas set aside. That application was supported by an affidavit of Mr Main deposing to the fact that he had spoken to both Mr Cicutto and the other person the subject of a subpoena, who was a legal officer in the NAB's head office legal department. Mr Main said that as a result of his inquiries he believed that neither Mr Cicutto nor the legal officer were able to give any relevant and admissible evidence in respect of the issues in the possession proceedings.
In support of the subpoenas Mr McFarlane told Byrne J that the two people subpoenaed were considered "to be probably the best available people to explain to the court what fractional reserve banking is." That concept had been pleaded in Mr and Mrs McFarlane's defence and counterclaim as tainting the transactions relied on by the NAB. During the course of the opening by counsel on behalf of the NAB on 8 April 2002 it had been said that the meaning of this concept was not understood. Accordingly, Mr McFarlane had been asked by the judge to state what it was "that you intend me to understand by the expression 'fractional reserve banking practices'." He was given a period of time including the luncheon adjournment to formulate his response. As recorded at pages 65 and 66 of the transcript of the hearing before Byrne J, it was as follows:
"MR McFARLANE: Well to start off, Your Honour, the bank has – there's a fraction of the reserve that the bank lends out, that is the first point, it only has a percentage.
HIS HONOUR: I beg your pardon?
MR McFARLANE: The bank only has a fraction of the money that it lends out, this is what I am explaining, this fractional reserve business. What we are saying is the bank – for every dollar it has in reserve it can lend it out X amount of times, that is the first point. And section 51(4) of the Australian Constitution says 'borrowing money on the public credit of the Commonwealth..' Now, it would appear that borrowing money on the public credit has been usurped from the Australian Constitution, that is by the people of Australia, by the banks.
This matter – all this has been before this court and your Honour on three previous occasions in different cases, one was with the McKinnons from Ararat, two was from the Walter family from Wodonga, and three, a grand jury application of documents which Your Honour has received and acknowledged.
Fractional reserve banking is the same as the following: it's credit creation, manufactured credit, bank credit or social credit. These references can be found in the following case: Bank of New Sales v Commonwealth … Attorney-General of Alberta v Attorney-General of Canada; and Melbourne Corporation v the Commonwealth. And also it's been drawn to my attention over lunch that we have a witness in a Mr Michael Watts of Werribee, who could be a witness for us on these matters. He is very conversant with all the fractional reserve banking, he is an ex-banker, and things like that.
HIS HONOUR: You say that engaging in that practice, in terms of paragraph 38 of your defence, is breach of a duty of care, breach of a fiduciary duty, and breach of a duty not to commit fraud?
MR McFARLANE: That would be correct, Your Honour.
HIS HONOUR: All right, thank you."
The first application to set aside Mr Cicutto's subpoena was unsuccessful, apparently because his Honour ruled that it was at least possible that Mr Cicutto could give evidence as to what was involved in the concept of "fractional reserve banking."
Mr Main subsequently obtained instructions from Mr Cicutto by telephone as to his knowledge of the subject matter upon which the McFarlanes were proposing to lead evidence from him. He then arranged for an affidavit by Mr Cicutto to be typed at his office and brought to him at Court. He received several copies of the draft affidavit. Mr Main then attended Mr Cicutto's office at 500 Bourke Street, Melbourne. Mr Cicutto swore the affidavit after a number of alterations had been made by hand to its wording. In the final form, the relevant part of that affidavit was as follows:
"1.I am the Managing Director of the Plaintiff, National Australia Bank Limited.
2. I make this Affidavit from personal knowledge.
3. In 1988 I was working in America.
4.I have no knowledge of the Defendants or their banking affairs with the Plaintiff.
5.I have been asked whether I am familiar with the phrase of 'fractional reserve banking'. I have never previously heard of this concept and I have no understanding or knowledge of the concept.
6.I have read pages 65 and 66 of the Transcript of the Hearing of this proceeding and Mr McFarlane's explanation of 'fractional reserve banking practices' and that explanation does not assist me to any understanding of the expression and remains an expression that I do not understand nor have any knowledge of.
7.Accordingly there is no relevant evidence I can give to the Court regarding fractional reserve banking or fractional reserve banking practices.
8.I have a number of other commitments today and unless I can give evidence of assistance to the Court, I would respectfully request that I not be required to attend Court."
[The altered or added words are underlined]
Mr Main took the sworn affidavit back to Court so that it could be used in a further application to set aside the subpoena to Mr Cicutto before the Court adjourned for lunch. This time the application was successful.
Mr McFarlane filed an affidavit affirmed by him on 15 July 2002 in support of the defendants' application for leave to appeal against the judgment in the possession proceedings. In that affidavit, Mr McFarlane complained that:
"(e)Justice Byrne dismissed our subpoena to Frank Cicutto on the evidence of an affidavit, which was not sworn.
(f)Justice Byrne allowed the plaintiff to substitute an affidavit of Frank Cicutto, which is still technically wrong, over the lunch break of the sitting."
Mr McFarlane further stated in one of two affidavits affirmed by him on 19 September 2002, in referring to Mr Cicutto's affidavit sworn on 10 April 2002:
"3.The trial judge dismissed the subpoena on the strength of that affidavit.
4.After the lunch break, I complained that the affidavit of Mr Cicutto was not sworn, the judge immediately stated that I obviously did not have a copy of the affidavit that he had. The judge then had his copy of the affidavit shown to me and ordered a copy to be made for my benefit."
Mr Main, in an affidavit sworn by him on 18 July 2002 in opposition to the application for leave to appeal against the judgment in the possession proceedings, deposed to what he said had occurred concerning Mr Cicutto's affidavit:
"Upon a copy of the Affidavit which had been brought to Court with the original I hand wrote the amendments which had been made to the original before swearing and I printed the initials of Mr Cicutto and my name as the signatories on page 2. The original Affidavit was filed with the Court and a copy prepared in the manner I have described was given to Mr McFarlane. The content of the copy Affidavit served was identical to the content of the original. No substitution of the original thereafter occurred and the decision of Justice Byrne was made on the sworn original as filed."
Despite the fact that Mr Michael Watts or Wataszczuk, the gentleman referred to by Mr McFarlane in his explanation of the concept of "fractional reserve banking" was called to give evidence, on 11 April 2002 Byrne J found for the plaintiff bank. His Honour rejected as "arrant nonsense" the proposition advanced by Mr Wataszczuk that a customer who borrows money from a bank upon the security of a mortgage, like the McFarlanes, was in fact a lender to the bank because the bank only created a book entry and did not hand over any bullion, banknotes or coin and therefore that there had been no lawful consideration given for the mortgages.[2] The McFarlanes' case on this point was no doubt not helped by the finding by his Honour that the NAB had:
"provided the money required by the McFarlanes, permitting them to use it to discharge their own liabilities, notably their liability to pay about $150,000 under a contract of sale for the purchase of the Angle Road property in 1988. The fact that the money was not provided in bullion, coin or banknotes is beside the point."[3]
[2][2002] VSC 116 at [7]
[3][2002] VSC 116 at [9]
By a motion for mistrial dated 11 April 2002 the McFarlanes alleged that indictable offences in breach of various sections of the Crimes Act 1958 had been committed. The motion, signed by both of them, continued:
"Such offences, involved directly or indirectly, Mr F. Cicutto, M. Main, Mr Clarke and Justice Byrne."
Mr PH Clarke SC had been senior counsel for the NAB in the possession proceedings.
On 31 July 2002, following the judgment in the possession proceedings, the defendants laid two charges against the second plaintiff, Mr Cicutto, alleging, first, that on 10 April 2002 he "committed wilfull [sic] perjury in an affidavit filed in the Supreme Court of Victoria" and, secondly, that on the same day he attempted to pervert the course of justice "by perjury." Mr Cicutto was summoned to appear at the Magistrates’ Court of Victoria at Melbourne on 27 August 2002.
Also on 31 July 2002, the defendants laid three charges against the third plaintiff, Mr Main, alleging, first, that on 18 July 2002 he "committed wilfull [sic] perjury in an affidavit filed in the Court of Appeal", secondly, that on 10 April 2002 he attempted to pervert the course of justice "by preparing an affidavit for Francis John Cicutto", and thirdly, that on 10 April 2002 he "aided and abetted Francis John Cicutto to commit perjury and attempt to pervert the course of justice." Mr Main was also summoned to appear at the Magistrates' Court of Victoria at Melbourne on 27 August 2002.
It was not completely clear what affidavit material supported the charges. There was in evidence a document called "Affidavit", but without any Court heading, which Mr McFarlane affirmed on 30 July 2002. It set out the background to the charges against Mr Main and identified the matters giving rise to the allegations by placing the charge number in brackets following the relevant paragraph of the affidavit. Mrs McFarlane affirmed a single line affidavit on 31 July 2002 which said that she confirmed and relied upon Mr McFarlane's affidavit. No affidavit of Mr McFarlane affirmed on 30 July 2002 outlining the basis for the charges against Mr Cicutto went into evidence. However, there were two affidavits of Mr McFarlane affirmed on 19 September 2002 in evidence in this proceeding. As the 19 September 2002 affidavit regarding Mr Main was in identical terms to the 30 July 2002 affidavit, it seems reasonable to assume that if an affidavit regarding the charges laid against Mr Cicutto was also affirmed by Mr McFarlane on 30 July 2002 it would have been in identical terms to that affirmed on 19 September 2002.
The 30 July 2002 affidavit regarding Mr Main outlined that the main allegation of perjury against him stemmed from the defendants’ belief that they had not been given an original hand-amended copy of Mr Cicutto’s affidavit of 10 April 2002, as Mr Main swore on 18 July 2002 (see paragraph 11 above), but rather that they had been given a photocopy of an amended affidavit and that as a result the 18 July 2002 affidavit was false. The relevant paragraphs of Mr McFarlane’s 30 July 2002 affidavit state:
"5.Mr Main swore that upon a copy of the affidavit, which had been brought to the court with the original, he hand wrote the amendments which had been made to the original before swearing and he printed the initials of Mr Cicutto and his name as signatories on page 2.
6.Mr Main swore that the original affidavit was filed with the Court and a copy prepared in the manner he had described was given to Mr McFarlane. Now produced and marked with the letters MMcF2 is a copy of that affidavit of Francis John Cicutto.
7.The affidavit, given to me, did not have original pen alterations, as sworn, but was one which was a photocopy of hand written alterations. (Charge 1)
8.If there was time to photocopy the altered document to hand to me, there was time to photocopy the 'original sworn affidavit' to give to me.
…
11.Mr Cicutto has been charged with perjury, therefore Mr Main has aided and abetted in that perjury. (Charge 2)
12.Mr Main, by his actions, to get mr Cicutto [sic] to commit perjury and not give evidence on the fractional reserve banking practices of creating credit and other like activities, has attempted to pervert the Course of Justice. (Charge 3)"
The affidavit supporting the charges against Mr Cicutto, whether originally affirmed on 30 July 2002 or only on 19 September 2002, provided greater detail of the basis for the perjury allegedly contained in his 10 April 2002 affidavit. It followed a similar form to Mr McFarlane's affidavit relating to Mr Main. Referring first to the NAB's 2001 Annual Review and subsequently to various textbooks on commerce and economics, which he said explained "how the banks create money, they don't have, and lend it out", some of the relevant paragraphs read as follows:
"15.In the 2001 National annual review, Frank J. Cicutto is shown as signing off the director's declaration that the concise financial report was derived from and consistent with the full financial report for the year and complies with Australian Accounting Standard AASB 1039.
16.In the 'Supplementary statement of financial position', 'Loans and advances' are shown as $207,797,000,000 and 'Regulatory deposits' are shown as $98,000,000. The regulatory deposits are approximately 4% of loans and advances. This is one aspect of Fractional Reserve Banking, which Frank Cicutto signed off as correct and which he denied any knowledge of in his sworn affidavit of 10 April 2002. (Charge 1) …
…
20.In 'Economics private and public choice', Harcourt Brace Jovanovich, by Gwarty and Stroup, there is a chapter entitled 'How Banks Create Money.' Frank Cicutto would not be able to do his job if he knows nothing of this activity but he has sworn that he knows nothing even of the concept in his affidavit of 10 April 2002. …
21.Frank Cicutto did not want to give evidence at the trial because it would or could have taken the defence arguments from the 'Form' to the 'Substance', which would risk the public finding out what really goes on with their 'Loans', and place the bank in a position of losing the Court case, which must run along the lines of 'Form' not 'Substance'. By perjuring himself, Frank Cicutto had attempted to pervert the Course of Justice and, in fact, did pervert the Course of Justice because Justice Byrne gave possession to the bank even though, during the trial, the bank admitted that it had not paid any money into the McFarlane accounts. (Charge 2)"
Following service of the respective informations and summonses, Dr DJ Neal of counsel was briefed to represent the second and third plaintiffs. On 16 August 2002 Dr Neal wrote to the Director of Public Prosecutions ("the DPP"), Mr Paul Coghlan QC, requesting that he take over the prosecutions. He enclosed the summonses, the supporting affidavits and exhibits.
On 26 August 2002 Ms T Heffernan, then Associate to the DPP, wrote to both the defendants and Dr Neal, informing them that the DPP had examined a copy of the material served on Mr Cicutto and Mr Main and had come to the conclusion "that the charges cannot be sustained in law." Ms Heffernan advised that it was the DPP's intention "pursuant to s.22(1)(b)(ii) of the Public Prosecutions Act 1994 (Vic) to take over the prosecutions and discontinue them." The defendants replied by letter dated 27 August 2002 advising that any attempt by the DPP "to interfere, take over, discontinue or otherwise Pervert the Course of Justice in these matters" might lead to charges being brought against him. On the same day the private informations against Mr Cicutto and Mr Main were struck out in the Melbourne Magistrates' Court on the application of the DPP.
Ms Heffernan gave evidence that a private criminal information was subsequently laid against the DPP by the defendants charging him with attempting to pervert the course of justice. These charges were taken over by the Attorney-General for Victoria and struck out in the Magistrates’ Court of Victoria on 21 March 2003.
For reasons which it is unnecessary to traverse at this stage, the McFarlanes' attempts to lodge notices of appeal from Byrne J’s judgment in the possession proceedings were unsuccessful and as a consequence they were required to apply for extensions of time within which to apply for leave to appeal. Those applications were heard by the Court of Appeal, consisting of Ormiston and Vincent JJA, on 20 September 2002, at the same time as an application by the McFarlanes for leave to appeal against the dismissal by Beach J of the appeal in the Ballarat proceeding. It is important to note how the Court of Appeal treated the applications arising out of the possession proceedings. Vincent JA, with whom Ormiston JA agreed, stated in his reasons as follows:
"As Ormiston J.A. has already indicated when the matter was last before us, the failure of the applicants to serve proper notices within time was unfortunate but should not in the circumstances lead to a disadvantage to them. Accordingly, it is to the merits of the applications that attention has been directed."
Their Honours concluded that all three applications should be dismissed because there was nothing capable of supporting a conclusion that either decision was attended by sufficient doubt to justify a grant of leave to appeal or which could support an argument that some miscarriage of justice might have occurred. On 18 October 2002 the defendants applied to the High Court of Australia for special leave to appeal against this decision. The application was still unresolved at the time of the hearing before me. (The application was subsequently refused on 10 December 2004).
In October 2002 further applications were made to the Court of Appeal seeking an order that a grand jury be summoned under s.354 of the Crimes Act 1958 to hear evidence concerning the subject matter of the private informations against Mr Cicutto and Mr Main which had been struck out. By a letter dated 8 November 2002 the Registrar of the Court of Appeal wrote to the McFarlanes confirming earlier advice that the application was not in order in that it did not reflect the requirements of the Crimes Act. By a letter dated 16 November 2002 the defendants replied to the Registrar stating that "the applications are to be resubmitted for Grand Jury (23 men) and not office staff or judges." They then said that "if this does not occur, the alternative is that the staff of the Court of Appeal, risk being charged with Attempting to Pervert the Course of Justice in the Magistrates’ Court." The Registrar sent a further letter dated 28 November 2002 explaining why the application was not in order.
Meanwhile pursuant to the judgments in the possession proceedings, on instructions from the NAB, an advertisement for a sale of one of the defendants' property by Mortgagee’s Tender was placed in the Northern Times of 22 November 2002 by real estate agents Sutherland Farrelly. In the Weekly Times of 27 November 2002 a public notice appeared which referred to the defendants' property and then continued:
"The property is not for sale. Legal action is continuing in the High Court. Criminal charges are still pending in regards to the CEO and solicitor of the Mortgagees."
On 28 November 2002 the defendants wrote to Mr Grant Sutherland and Mr Geoff Sutherland of Sutherland Farrelly advising them of their "actions" in the High Court and of the various charges that had been brought against Mr Cicutto and Mr Main. They advised of the possibility of charges being brought against the Magistrate who allowed the DPP to discontinue the charges, and against the DPP and against the staff of the Court of Appeal with respect to the grand jury application. The letter then stated that the defendants reserved their rights to charge the Sutherlands also with attempting to pervert the course of justice, if they persisted with the sale of the property, and referred to the potential punishment for that crime as 15 years' imprisonment. The defendants concluded with the statement that: "We still have plenty of blank Charge and Summons forms."
Mr Geoffrey Sutherland gave evidence that because he was concerned about the content of the letter he obtained legal advice from Mr Main regarding it and then proceeded with the sale. Mr Sutherland also gave evidence alleging that the defendants placed a large corrugated iron sign on the property stating it could not be sold, or words to that effect. He said that this caused concern amongst potential buyers. Nevertheless, he said that the price eventually received of $95,100 was a very good price for the property given the very severe drought at that time. Subsequently, the other property was sold by Sutherland Farrelly on behalf of the NAB.
On 13 December 2002 further charges were laid against each of the second and third plaintiffs. In this second set of informations Mr Cicutto was charged that "on 11 April 2002 in a judgment of Byrne J, in the Supreme Court of Victoria, and by your refusal to give evidence on the fraudulent practice of unlawful credit creation on promissory notes, without the knowledge of the registered proprietors, you Obtained Property by Deception" and Mr Main was charged with aiding and abetting the obtaining of property by deception, for his part in assisting Mr Cicutto’s refusal to give evidence. Initially, the names and signatures of both defendants appeared as the informants, but Mr McFarlane's name and signature were then crossed out. When and why that was done was not clear. It may be that it was thought that as a bankrupt Mr McFarlane could not complain about property being obtained by deception.
Again the second and third plaintiffs engaged Dr Neal who wrote to the DPP on 17 December 2002 outlining the nature of the new charges and their relationship to those laid on 31 July 2002, and requesting that these charges also be taken over and discontinued by the DPP.
However, on 20 December 2002 the plaintiffs issued the current proceeding, and on the same day they applied ex parte to Beach J. His Honour ordered that the charges and summonses issued on 13 December 2002 against the second and third plaintiffs be stayed until further order and that the defendants be restrained until further order from laying or preferring any charges against the plaintiffs, and from interfering with the sale of both the Angle Road and Mystic Park properties.
On 29 January 2003 the plaintiffs' application for interlocutory injunctions came before Bongiorno J. His Honour ordered:
"1.That on or before 5 February 2003 the second defendant perform all actions necessary to effect the discontinuance of the charges brought by her against Michael Douglas Main and Francis John Cicutto on 13 December 2002 in the Magistrates' Court of Victoria.
2.That the said charges be stayed until they are discontinued in accordance with paragraph 1 of this order.
3.That the defendants, whether by their servants or agents or howsoever otherwise be restrained, until the trial of this action or further order, from laying or preferring any charges for summary or indictable offences in the Magistrates' Court of Victoria or in any other court against the first plaintiff, its solicitors or estate agents or any employee, servant or agent of the first plaintiff, its solicitors and estate agents or against the second plaintiff or the third plaintiff.
4.That the defendants, whether by their servants and agents or howsoever otherwise be restrained, until a trial of this action or further order, from taking any steps whatsoever to hinder or prevent the advertising or sale or the taking of possession by the first plaintiff of the property known as Angle Road, Kunat being the lands more particularly described in Certificate of Title by volume 7504 folio 4119 or the property known as Mystic Park, Kunat and being the lands more particularly described in the Crown grant by volume 6632 folio 238 and Crown grant volume 7750 folio 008 and from publishing or distributing any notice or article or document to members of the public or erecting any sign concerning or affecting the advertising, sale or taking of possession by the first plaintiff of any of the properties."[4]
[4]National Australia Bank Limited v McFarlane [2003] VSC 19 at [20]
The second set of informations were in due course struck out by the Magistrates' Court of Victoria.
The Hearing
At the defendants' insistence this matter continued to trial. The defendants opposed the plaintiffs' application for a permanent order in the terms of paragraph 3 of the interlocutory order of Bongiorno J.
The plaintiffs were represented at the hearing by Mr Garde QC and Mr Schlicht of counsel. The defendants were unrepresented. The witnesses called on behalf of the plaintiffs were Mr Geoffrey Sutherland; Mr Robert Schade, the Manager of the Court of Appeal Registry in this Court; Dr David Neal; Ms Tamara Heffernan; Mr Donald Lawson, the Deputy Chief General Counsel of the NAB; and the third plaintiff, Mr Main. The witnesses called on behalf of the defendants were Mr Anthony Smart, who was present in court assisting the McFarlanes in the trial before Byrne J and, under subpoena, the second plaintiff, Mr Cicutto. Neither of the defendants gave evidence.
Private Prosecutions
The right of ordinary citizens to bring private prosecutions has a long and well-established history. Prior to the modern practice of police informants bringing a criminal charge before a judicial officer, it was expected that, except for certain serious crimes against the state, criminal behaviour would be brought to the attention of the authorities by private individuals. It is in part in recognition of this historical background that the right continues to this day. According to a Full Bench of this Court:
"The general rule is that any member of the public may lay an information for an offence if the breach of law charged is of a public nature."[5]
It is also seen as "a valuable constitutional safeguard against inertia or partiality on the part of authority."[6]
[5]Armstrong v Hammond [1958] VR 479 at 480 per Herring CJ, O'Bryan, Deane, Sholl and Adam JJ
[6]Gouriet v Union of Post Office Workers [1978] AC 435 at 477 per Lord Wilberforce
Whilst it has therefore been seen as necessary to preserve the right to bring private informations, it has been considered equally necessary to have checks and balances within the law to prevent the bringing of private prosecutions that are entirely without foundation or inspired by an ulterior motive other than the appropriate maintenance and upholding of the law. Undoubtedly the bringing of inappropriate private prosecutions is not only damaging to the public good as a waste of the valuable and currently overstretched resources of the state, but such conduct can also damage the individuals who are inappropriately charged. A modern statutory response to this dilemma is to be found in s.22(1)(b)(ii) of the Public Prosecutions Act 1994, which is the power in fact utilised by the DPP in respect of the first set of informations. This permits the DPP "if he or she considers it desirable to do so" to take over and conduct any proceedings in respect of any summary or indictable offence, other than proceedings consequent on a finding of a grand jury. Conducting the proceeding includes discontinuing it.
A more ancient response was the development of the tort of malicious prosecution to protect individuals affected by inappropriate criminal or civil proceedings. In Soare v Ashley[7] Herring CJ said:
"It was most important (and still is) that the ordinary citizen should assist the forces of law and order to bring offenders to punishment by reporting to them any information he may have about the commission of crimes, and that he should be encouraged to do so. At the same time the laying of groundless charges can do immeasurable harm to honest citizens, however gratifying it may be to the spite of those who bear them ill will. A balance needs to be kept between the two. The action for malicious prosecution was the means provided by the law to redress the balance."
Similar views were expressed by Ormiston J in Little v Law Institute of Victoria (No. 3)[8]:
"The law relating to malicious prosecution has a history which is both complex and interesting, reflecting the policy of the courts in attempting to protect litigants against unreasonable claims. Sometimes the balance has weighed against those who falsely institute litigation, sometimes it has weighed against the unnecessary re-litigation of issues."
[7][1955] VLR 438 at 440
[8][1990] VR 257 at 276. See also Davis v Gell (1924) 35 CLR 275 at 282 per Isaacs ACJ.
Malicious Prosecution
Counsel for the plaintiffs argued that the actions of the defendants in bringing the two sets of private informations described above constituted malicious prosecution. They submitted that in order to establish the tort of malicious prosecution a plaintiff was required to prove the following five key elements:
(a)that the defendant instituted or continued the previous proceeding complained of, or was actively instrumental in instituting or continuing that proceeding;
(b)that the previous proceeding was terminated in favour of the person against whom it was brought;
(c)that the previous proceeding was brought without reasonable and probable cause;
(d)that in instituting or continuing the previous proceeding the defendant was activated by malice; and
(e) that as a result damage of a relevant kind was caused to the plaintiff.[9]
[9]Little v Law Institute of Victoria(No 3) [1990] VR 257 at 262 and 265 per Kaye and Beach JJ. See also Halsbury's Laws of Australia Vol 26 at [415-1695]
I am satisfied that, as far as the second and third plaintiffs are concerned, the first element is made out. There is no doubt that on 31 July 2002 each of the defendants brought the two charges against Mr Cicutto and the three charges against Mr Main. Equally, there is no doubt that on 13 December 2002 Mrs McFarlane brought the further charges against Mr Cicutto and against Mr Main. Mr McFarlane, representing both defendants, did not quarrel with this aspect. Indeed, allegations to this effect were admitted by the defendants in both their defence and their amended defence.
With respect to the second element, Mr McFarlane made the point that it was not possible to say finally whether the charges against Mr Cicutto and Mr Main were determined in their favour because they had never had their "day in court." On the other hand, counsel for the plaintiffs submitted that the discontinuation of the charges against both Mr Cicutto and Mr Main, first by the DPP under s.22(1)(b)(ii) of the Public Prosecutions Act 1994 and then by Mrs McFarlane pursuant to the order of Bongiorno J, was sufficient to make clear that each of the previous proceedings was terminated in favour of the person against whom it was brought. The fact of discontinuation had been evidenced by certificates from a Registrar of the Magistrates’ Court of Victoria and in respect of the first set of informations by admissions in the defendants' defence and amended defence.
The discontinuation of the previous proceedings in this case can be contrasted with situations such as those where the plaintiff cannot prove malicious prosecution because the charges have resulted in a conviction[10], or where even though the information was dismissed the charges were found to be proved but without a conviction being entered.[11] In Commonwealth Life Assurance Society Ltd v Smith[12] the High Court of Australia explained "the reason of the rule" by reference to three different considerations. First, to prevent a retrial of the merits of the previous proceedings by collateral rather than appellate review. Secondly, to prevent imputations in one proceeding against the justice of another proceeding still on foot or of a judicial determination still in force. And thirdly, because it is only where the previous proceedings have been determined in the plaintiff’s favour that those proceedings can be seen to be without proper foundation. [13]
[10]Davis v Gell (1924) 35 CLR 275 at 289 per Isaacs ACJ
[11]Cameron v James [1945] VLR 113 at 117 per Herring CJ and Gavan Duffy J
[12](1938) 59 CLR 527
[13](1938) 59 CLR 527 at 538-539 per Rich, Dixon, Evatt and McTiernan JJ
In my opinion, the actions of the DPP in discontinuing the first set of informations and that of Bongiorno J in ordering that the second set of informations be discontinued and the consequent orders of the Magistrates' Court are sufficient to establish that the previous proceedings were terminated in favour of the second and third plaintiffs. In both situations the charges were assessed and resolved according to law by individuals legally and routinely empowered to determine them. As previously stated, the evidence was that the DPP had concluded that the first set of informations could not be "sustained in law." Bongiorno J was even stronger in his rejection of the validity of the second set of informations. His Honour said:
"In this instance, having read all of the material filed in support of the plaintiff's applications and having heard everything that Mr McFarlane wished to say, it is impossible not to come to a very firm conclusion that there is no basis whatsoever for the contentions which the defendants advance.
Their refusal to accept the finality of the orders of this Court is but the commencement point of their delusion. They then construct, by a series of ill-conceived and in many instances self-contradictory propositions, a purported case of criminality against the plaintiffs and, indeed, anyone else who in any way denies the justice of their original case; which case has, of course, been conclusively ruled upon by this Court as having no merit whatsoever.
… Whatever the defendants (or the second defendant particularly) have filed must be withdrawn."[14]
[14][2003] VSC 19 at [11]-[13]
The next question is whether the charges against Mr Cicutto and Mr Main were brought without reasonable and probable cause. In Hicks v Faulkner[15] Hawkins J defined reasonable and probable cause as an honest belief in the guilt of the accused based upon a full conviction, founded upon reasonable grounds, of the existence of a state of circumstances, which, assuming them to be true, would reasonably lead any ordinary, prudent and cautious person placed in the position of the accuser to the conclusion that the person charged was probably guilty of the crime imputed. Thus, there are both objective and subjective elements to the test. It requires a genuine belief, which is also reasonable.
[15](1878) 8 QBD 167 at 171. Quoted with approval by Dixon J in Sharp v Biggs (1932) 48 CLR 81 at 109.
The first two informations against Mr Cicutto related to his affidavit which had been prepared by Mr Main and filed in the possession proceedings, in support of the application to set aside a subpoena requiring him to give evidence in those proceedings. The essence of that affidavit was that Mr Cicutto disclaimed any knowledge of the concept practice of "fractional reserve banking." As I understood it, the principal argument that the defendants relied upon in support of the reasonableness and probability of success of these charges was that "fractional reserve banking" is such a common concept that Mr Cicutto must have gained knowledge of it in the course of his career in the upper echelons of management of a major bank, and that his sworn denial of such knowledge must have been false. In advance of this position Mr McFarlane tendered the following extract from the Encyclopaedia Britannica:
"fractional reserve system, also called MINIMUM RESERVE SYSTEM, banking system followed by all modern banks in which less than 100 percent of bank deposits are held as reserves. The portion of the money not held as reserves is used to earn income by means of loans and investments; some of this portion eventually returns to the banking system as new deposits. Thus, the banking system is able to expand the money supply through the creation of new demand deposits.
Banks do not have unlimited freedom to expand deposits but must usually maintain required reserves, which may be held as currency or as deposits at the central bank. The ratio of the required reserves to a bank's total deposits may be set by custom or by law; use of legally required reserves appears to have originated in the United States.
The fractional reserve system is strengthened by the ability of banks to liquidate some of their assets quickly by calling in loans, selling short-term securities, or borrowing cash from the central bank."[16]
[16]The New Encyclopaedia Britannica Vol 4 Micropaedia p.915
When Mr Cicutto gave evidence in response to a subpoena he denied committing perjury. He asserted that his affidavit was true in that at the relevant time he had no knowledge of "fractional reserve banking" with which to assist the court in the possession proceedings. Mr Cicutto gave evidence that he had contacted the NAB’s then chief economist, Mr Alan Oster, in the course of preparing his affidavit and that Mr Oster had told him that he also had no knowledge of "fractional reserve banking." Mr Cicutto gave evidence that the phrase "fractional reserve banking" was not a technical expression with which he had familiarity. In answer to questions from Mr McFarlane, Mr Cicutto said that while the NAB loaned out more money than it held in deposits, as a result of the use of equity derived from shareholders and borrowings from other financial institutions, at all times the NAB remained within the lending ratio limits required by prudential regulators.
Mr McFarlane submitted that the defendants only acted out of a genuine belief that Mr Cicutto had broken the law, and made reference to a duty to prevent criminal conduct. He submitted that any ordinary prudent person would have believed that there was a basis for a criminal charge of perjury when Mr Ciccuto, then Managing Director of the NAB, stated that he had no knowledge of "fractional reserve banking."
It has long been held that for the purposes of malicious prosecution where the prosecutor of the previous proceedings has a genuine and reasonable belief in the existence of facts which would justify prosecution, reasonable and probable cause for bringing the prosecution may be found even if those facts do not exist.[17] But here, there was no evidence that either of the defendants held a genuine belief in the guilt of Mr Cicutto as neither of them gave evidence.
[17]Hicks v Faulkner (1878) 8 QBD 167 at 173 per Hawkins J
Even if the McFarlanes had such a belief, I am satisfied that it was not a reasonable belief. In order to establish a reasonable basis for the belief, the standard of inquiry required of the prosecutor of the previous proceedings is only that of the reasonable, prudent and discreet person. That person is not expected to have the ability to assess the likelihood of a prosecution being successful that a lawyer might bring to the task.[18] Nonetheless, the law does require that the reasonable and prudent person also be cautious, and that the prosecutor weigh the evidence carefully, making reasonable inquiry into the state of the case so that there is a genuine belief that there exists sufficient evidence to sustain a conviction. Consequently, though the prosecutor need not have the knowledge of a lawyer, it would be prudent for a reasonable and cautious potential prosecutor to seek legal advice to ensure that sufficient evidence to sustain a prosecution did exist. Indeed, in finding that a lack of reasonable or probable cause did not exist in QIW Retailers Ltd v Felview Pty Ltd[19], Macrossen J emphasised that the defendant proceeded carefully in the previous proceeding, guided and assisted by the advice of solicitors.
[18]Lister v Perryman (1870) LR 4 HL 521
[19][1989] 2 Qd R 245
Here there was no evidence that the defendants, acting as prosecutors in the previous proceedings, had sought legal advice as to the likely success of a prosecution. Such legal advice would have informed them that the law of perjury, as stated in s.314 of the Crimes Act 1958, requires that the accused knowingly wilfully and corruptly upon oath, affirmation or declaration deposes, swears to or makes a false statement. This would involve the prosecutor in proving beyond reasonable doubt that Mr Cicutto intentionally gave false evidence and that he knew that the evidence was false. On the evidence I do not consider that a reasonable, prudent and cautious person would believe that Mr Cicutto was guilty of perjury or of attempting to pervert the course of justice. The charges against Mr Main of attempting to pervert the course of justice and aiding and abetting Mr Cicutto were also brought without reasonable and probable cause for the same reason.
The accusation of perjury against Mr Main centred on how Mr Cicutto's affidavit was prepared and the nature of the copy supplied to the McFarlanes during the possession proceedings. As set out in paragraph 11 above, on 10 April 2002 Mr Main provided the McFarlanes with a copy of the affidavit of Mr Cicutto with the amendments made by hand and the details of jurat indicated in an abbreviated form. Evidence was given by both Mr Main and Dr Neal that this was standard practice where exact copies of a sworn statement could be supplied to the opposing party in a proceeding due to practical limitations, such as time. Contrary to Mr McFarlane's assertion, I find that the document given to him was not a photocopy. That document, which was marked with a green circle by the McFarlanes' assistant, Mr Smart, at the time it was served, was presumably one of the several copies of the draft affidavit which had been brought to Mr Main at court. The handwritten additions were original markings. While knowledge of the common practice of marking up copy affidavits may not have been known to the plaintiffs, and may not be known by an ordinary prudent person without legal training or experience, in my opinion, had the defendants acted in a cautious manner and made the degree of inquiry that the law expects, this would have been revealed. Thus, even if there had been evidence of an honest belief in the guilt of Mr Main, the prosecution would not have been brought with reasonable and probable cause because an ordinary, prudent and cautious person would not have concluded that he had done anything wrong in terms of serving a copy of Mr Cicutto's affidavit on the McFarlanes.
Further, the second round of informations brought against Mr Cicutto and Mr Main in December of 2002 for the alleged obtaining of property by deception suffer from this same fault. There was no evidence of a genuine belief by the defendants of the validity of these particular charges, which is hardly surprising. Further, the degree of inquiry required of the ordinary prudent and cautious person to gauge whether there was a reasonable and probable cause for bringing these private criminal informations would have revealed that they were not appropriate. In my opinion, these two charges were clearly without reasonable and probable cause when objectively assessed. Appropriate inquiries into the circumstances of the charges would have revealed that insufficient evidence existed to sustain a conviction. Without canvassing all the elements of the crimes charged, it can be seen immediately that these charges were quite misguided. The property in question was obtained by the NAB after the defendants defaulted on their mortgage, and after a full hearing of the dispute had been conducted in this Court. To ascribe the obtaining of the property to the possibility of Mr Cicutto’s affidavit being in some part false or misleading, and to charge Mr Main with aiding and abetting that crime as a result of his preparing that affidavit in the manner described, could not reasonably have been considered to fulfil the requirements of s.81 of the Crimes Act 1958. However unfortunate it was that the home of the defendants was lost to them, presumably as a result of their inability to repay the NAB, it was not the correct response to the loss of their property for the defendants to allege serious criminal conduct by individuals involved in the legitimate furtherance of the NAB’s position.
This leads inevitably to the next question of whether the defendants in laying the charges were actuated by malice. A crucial consideration here is that the presence of malice for the purposes of malicious prosecution is not solely indicated by actual spite or ill-will. In Stevens v The Midland Counties Railway Company[20], Alderson B said that
[20](1854) 10 Exch 352 at 356; 156 ER 480 at 482
"Any motive other than simply instituting a prosecution for the purpose of bringing a person to justice, is a malicious motive on the part of the person who acts in that way."
In Dent v Standard Life Association[21] the Full Court of the New South Wales Supreme Court said of the requirement that the defendants be actuated by malice:
"That does not mean malice in fact, but some wrong motive, some motive other than a desire to bring to justice a man whom the defendant honestly believed to be guilty of the offence charged."
In Glinski v McIver[22] the House of Lords confirmed this approach, with Lord Devlin stating that:
"Malice, it is agreed, covers not only spite or ill-will but also any motive other than a desire to bring a criminal to justice."
[21](1904) 4 SR (NSW) 560 at 565 per G.B. Simpson J, with whom Cohen and Pring JJ agreed
[22][1962] AC 726 at 766
Thus, the presence of an ulterior purpose, even where a genuine subjective belief in the criminality of the conduct exists, is sufficient to establish malice. Indeed Jordan CJ stated in Mitchell v John Heine & Son Ltd[23] that:
"… proof that the defendant had instituted the prosecution in the complete absence of any information pointing to guilt, or upon information which was ludicrously and obviously insufficient, might of itself supply evidence warranting an inference of malice in a particular case."
This reflects the reasoning of the older case of Brown v Hawkes[24] in which it was held that any wrong or indirect motive will amount to malice, and such malice can be proved:
"either by showing what the motive was and that it was wrong, or by showing that the circumstances were such that the prosecution can only be accounted for by imputing some wrong or indirect motive to the prosecutor."[25]
[23](1938) 38 SR (NSW) 466 at 474
[24][1891] 2 QB 718
[25][1891] 2 QB 718 at 722 per Cave J
Here there is no doubt that an indirect or ulterior motive existed for the bringing of criminal charges against Mr Cicutto and Mr Main. The intention of the defendants in prosecuting the charges was to further their campaign to retain or win back their properties. The affidavit which was the central element of the facts behind the bringing of the charges was sworn in the possession proceedings and it was the outcome of those proceedings that the defendants sought to influence by bringing the criminal charges. It was submitted for the plaintiffs that the charging of the DPP went to show this malice, as did the threatening of charges against the real estate agent, Mr Sutherland, and the staff of the Court of Appeal Registry. However, the strongest evidence in this regard is the affidavit of Mr McFarlane affirmed on 19 September 2002 in support of the two charges against Mr Cicutto. In that affidavit Mr McFarlane stated that:
"21.Frank Cicutto did not want to give evidence at the trial because it would or could have taken the defence arguments from the 'Form' to the 'Substance', which would risk the public finding out what really goes on with their 'Loans', and place the bank in a position of losing the court case … by perjuring himself, Frank Cicutto had attempted to Pervert the Course of Justice and, in fact, did Pervert the Course of Justice because Justice Byrne gave possession to the bank even though, during the trial, the bank admitted that it had not paid any money into the McFarlane accounts. (Charge 2)"
The passage clearly demonstrates that the primary matter at issue here was the attempted retention of the properties the subject of the possession proceedings. The criminal charges were laid in an attempt to prove that the NAB’s position was unsupportable and that the fundamental basis of the mortgage transaction through which the NAB eventually came into possession of the defendant’s properties was unfair, unjust or illegal. Relying on the authorities quoted above, it is not necessary to take the matter further and assess whether this led to ill-will or spite on behalf of the defendants as the prosecutors of these private informations. It is certainly the case, in my opinion, that part of the motivation for the bringing of the charges was to alter the course of the NAB’s dealing with the defendants' properties.
In his final submissions, Mr McFarlane denied that there was "any spite or any malicious purpose" in he and his wife laying the private informations. He said that they were merely "seeking of justice." Once again, this statement suffered from the fact that it was not on oath and subject to cross-examination and therefore part of the evidence. Accordingly, I am satisfied that it has been established that in bringing the first set of informations the defendants were activated by malice and that the same applied to the second defendant in respect of the second set of informations.
The final requirement that must be proved by the plaintiffs to establish malicious prosecution is that of having suffered damage of a kind relevant to or compensable by the tort of malicious prosecution. Holt CJ in Savile v Roberts[26] set out the three types of damage that are compensable under the tort of malicious prosecution, namely damage to the person, property or reputation. This statement was endorsed by the joint judgment of Rich, Dixon, Evatt and McTiernan JJ in Commonwealth Life Assurance Society Ltd v Smith[27].
[26](1698) 1 Ld Raym 374; 91 ER 1147
[27](1938) 59 CLR 527 at 544
It was submitted for the plaintiffs that there was damage to property, in the form of legal fees incurred in defence of the charges, and damage to reputation. The evidence of Mr Lawson, the Deputy Chief General Counsel of the NAB, was that legal fees in the amount of $19,616 were paid by the NAB on behalf of the second and third plaintiffs in defending the private prosecutions and that a further $24,000 approximately was paid in legal fees by the NAB in obtaining advice as to the effect that a conviction of the chief executive officer would have on the NAB in the numerous countries in which it or its subsidiaries operated. However, all of that expense was incurred by the NAB, not by Mr Cicutto or Mr Main who were the persons subjected to the malicious prosecutions.
Nevertheless, I respectfully agree with Ormiston J that:
"a false allegation of criminal conduct may readily be seen as causing great harm to a person, although he be eventually acquitted."[28]
Mr Main gave evidence about the effect that the charge of perjury had on him:
"I found it a very embarrassing matter because as a practitioner being involved in perjury would be professional suicide and something that any practitioner would regard with complete hostility as bringing the profession into disrepute. And I found it very embarrassing to be charged with a criminal offence after having spent as long in the profession as I have and it became my urgent priority to do something about having these charges disposed of."
Mr Main said that the same applied to the charge of attempting to pervert the course of justice because:
"nothing could be more fundamental in terms of inappropriate behaviour by a legal practitioner."
[28]Little v Law Institute of Victoria (No. 3) [1990] VR 257 at 279
Clearly, the charges laid against Mr Main were embarrassing and damaging to his reputation. I am also satisfied that the bringing of the charges against a senior member of the business community such as Mr Cicutto would have been equally embarrassing for him and damaging to his reputation. I am therefore of the opinion that the private informations did cause damage to the second and third plaintiffs for the purposes of the tort of malicious prosecution. As the plaintiffs only claim is for an injunction restraining the defendants from laying further criminal charges, it is not necessary for me to quantify that damage.
Abuse of Process
The alternative claim of the plaintiffs was that the charges amounted to the tort of collateral abuse of process and that the defendants could be restrained from bringing further charges on this basis. The High Court of Australia in Williams v Spautz[29] stated that:
"Central to the tort of abuse of process is the requirement that the party who has instituted proceedings has done so for a purpose or to effect an object which is beyond that which the legal process offers."
In Varawa v. Howard Smith Co Ltd[30] Isaacs J described the essence of the action for abuse of process as consisting in the fact that the initiator of proceedings has employed the process "for some purpose other than the attainment of the claim in the action." His Honour continued:
"If the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the Court is asked to adjudicate they are regarded as an abuse of process for this purpose."
[29](1992) 174 CLR 509 at 523 per Mason CJ, Dawson, Toohey and McHugh JJ
[30](1911) 13 CLR 35 at 91
In my opinion, this essential element of the tort of abuse of process is met by the finding of malice already made above. Even if the defendants genuinely believed that a crime may have been committed, their indirect purpose in using charges against the second and third plaintiffs to attempt to prevent the loss of their properties is enough to constitute the tort of abuse of process.
Unlike malicious prosecution, it is not necessary for the plaintiff in an action for abuse of process to show that the previous proceeding terminated in his or her favour nor that the proceeding was initiated without reasonable and probable cause.[31] It seems to me that these differences mean that the NAB is able to establish that it has a claim for collateral abuse of process against the defendants for their wrongful prosecution of its chief executive officer and solicitor in an attempt to force it to stop its efforts to gain possession of, and sell, the defendants' properties, whereas it could not make out a claim for malicious prosecution because it had not been the subject of any prosecution by the defendants.
[31]Williams v Spautz (1992) 174 CLR 509 at 522-523 per Mason CJ, Dawson, Toohey and McHugh JJ
The Claim for Injunctive Relief
Two final matters must be discussed in deciding whether injunctive relief is appropriate in this case, and if so what relief should be ordered. The first of these matters is whether there is evidence of an ongoing threat of further charges being brought by these defendants.
An unfortunate aspect of this case is that whatever may have been the defendants' beliefs about the "injustice" of not being permitted to call Mr Cicutto to give evidence about "fractional reserve banking", it is clear that the bringing of charges became the defendants’ modus operandi whenever a step adverse to their interests was taken in the conduct of any of the litigation involving the NAB's attempts to sell their properties. This is evidenced by the charge laid against the DPP, the accusation made against counsel who appeared for the NAB in the possession proceedings, the threats made against staff of the Court of Appeal, the threats made to the real estate agent Mr Sutherland and the second set of charges that alleged obtaining property by deception despite the discontinuance of the original charges on which they relied. The strongest evidence in this regard was a letter written by the defendants to Sutherland Farrelly in which they referred to the possibility of bringing private informations against the DPP, the Magistrate who allowed the DPP to discontinue the first round of charges, and staff of the Court of Appeal of the Supreme Court of Victoria for the charge of attempting to pervert the course of justice, included copies of the charges laid against Mr Cicutto and Mr Main, and then stated:
"We still have plenty of blank Charge and Summons forms."
The mere possession of blank charge and summons forms is in no way indicative of a future risk of malicious prosecution. However, the use of those documents as a form of threat in an attempt to prevent an agent of the NAB following his client’s instructions does indicate a pattern of behaviour of bringing private informations for an indirect or ulterior purpose. As the defendants did not themselves give evidence, it was also submitted for the plaintiffs that the rule in Jones v Dunkel[32] could be applied, in that it could be taken into account in the drawing of any inferences from this evidence that the defendants did not dispute that a continuing threat does exist. There is little doubt in this case that the self-represented defendants’ knowledge of the law did not extend to a full understanding of the implications of not giving evidence. However, in my opinion, the defendants should have understood that making a statement under oath that no further prosecutions would be brought, or at least that none would be brought without proper foundation (and assisted by full and appropriate inquiry into the likelihood of a prosecution being successful), would be good evidence against the plaintiffs’ need for ongoing injunctive protection. Indeed, it was submitted by the defendants that they still wish to have a full hearing of the matters raised by the charges, irrespective of the discontinuance of those charges by the DPP and Bongiorno J. Thus, as a matter of common sense, the Jones v Dunkel rule can be applied here, at least in as much as it allows the conclusion to be drawn that the defendants would not have completely denied, or been able to present compelling evidence against, the inference which is open on the evidence set out above that a continuing threat of malicious prosecution does exist. I am satisfied that there is such a threat of further baseless prosecutions if injunctive relief is not granted.
[32](1959) 101 CLR 298
The other matter which must be explored is the identification of the appropriate beneficiaries of the injunctive relief and the terms of that relief. It was submitted for the plaintiffs that an injunction against further prosecution should be ordered which would restrain the defendants from bringing any private informations against Mr Cicutto and Mr Main (the second and third plaintiffs), the NAB (the first plaintiff), all persons acting as the NAB's agents such as the real estate agents Sutherland Farrelly and its solicitors Russell Kennedy and counsel briefed to represent the plaintiffs in the possession proceedings and this proceeding, and all employees, servants or agents of those persons or entities.
Mr Cicutto and Mr Main have both made out a case of malicious prosecution and there is no difficulty in identifying them as persons who cannot be subjected to further criminal charges by the defendants. However, as discussed above, no private prosecution has been brought by the defendants against the NAB itself. Yet, as Bongiorno J said, it is "the principal target of the defendants' discontent."[33] Mr Cicutto and Mr Main were charged because of their involvement in the NAB's attempts to gain possession of the defendants' properties. Mr Sutherland was threatened with prosecution because he was acting as the NAB's real estate agent in selling the defendants' properties. It seems to me, therefore, that it is appropriate for the NAB, on the basis of the tort of collateral abuse of process, to be given protection against further unwarranted charges being brought against its employees and agents.
[33][2003] VSC 19 at [16]
The difficulty with such a large class of persons being included in the terms of an injunction is the possibility that the restraint would unfairly extend to situations not related to the past conduct of the defendants which has led to this proceeding. All employees and agents of a company as large as the NAB is a considerable number of people. Should the defendants have an entirely separate basis for legitimately bringing criminal charges, such as if a person employed by the NAB harmed them in an unrelated circumstance, for example by assaulting them, the defendants might be deprived of their right to seek redress for criminal behaviour if the police were unable or unwilling to do so. However, in my opinion, it was correctly submitted for the plaintiffs that the injunction could be worded in such a way that in the event of such circumstances arising in the future, the injunction could be amended by the Court on the presentation of new evidence. Given the defendants' past attitude and conduct, it would be very difficult to draft an injunction in some other way that would still give the plaintiffs the protection to which, I have found, they are entitled.
Consequently, I propose to order that, until further order, the defendants, whether by their employees or agents or howsoever otherwise, be restrained from laying or preferring any charges for summary or indictable offences in the Magistrates’ Court of Victoria or any other court against the first plaintiff, its solicitors or barristers or estate agents or any employee or agent of the first plaintiff, its solicitors or barristers or estate agents or against the second plaintiff or against the third plaintiff.
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